The Market will correct a too high price
After yesterday’s post about a too deep price discount being corrected by The Market, bless her heart (January 28, if robust, The Market will fix a too-low price (at least, it did, at 124 West 24 Street)), I just can’t resist the temptation to tweak a parallel theme in my sub-head about the recent resale of the “2,180 sq ft” Manhattan loft #1560 at 101 Warren Street. There’s another fascinating number story in the history of this loft, but that top line analysis is easy, given that the loft came to market on August 19 at $4.25mm and then jumped to $4.5mm two days later, selling on December 28 at $4.3mm, a discount to the latter price but a premium to the former. Only the selling team knows if that first price was a typo or the second price a shift in tactics, and only people who look incessantly at the sales history of reently closed Manhattan lofts would stop to wonder what would have happened had they stayed at $4.25mm.
I am tempted to think that they’d have done a little better had they stayed asking $4.25mm. After all, the “fact” is that the market value of the loft was $4.3mm, and there is logic behind the theory that asking below market in a robust market may prompt one of the (presumably) several bidders who recognize the too-low asking price as too low to react to a bidding war by over-paying. (Indeed, my post yesterday was premised on the conventional wisdom in the title being correct.) But we don’t get to do double-blind testing of alternative hypotheses with unique pieces of real estate. Sigh.
All that theorizing and temporizing aside, here’s a dramatic fact about this loft. Either the sale price a month ago was irrational, or the hyper-local market in this now busy corner of southwest Tribeca was irrational in 2011.
the $3.7mm question
The same agent and firm that just brokered a deal for loft #1560 at $4.3mm used the same prose and (many of the same) photos in failing to sell loft #1560 off an ask of $3.7mm from July 25, 2011 until January 19, 2012. Let’s try to distill that:
- no deal at $3.7mm ($1,697/ft) for 6 months
- 7 months hiatus
- deal at $4.3mm ($1,972/ft) in 2 months
I just don’t understand it and have scratched my head enough to realize that if there is an explanation (as opposed to this simply being a reason to throw up one’s hands over a less-than-rational market), I can’t see what it could be.
Indeed, the August 2012 was the more difficult campaign: that hiatus period in between the two campaigns turns out to have been the result of the loft having been rented out in January 2012 (you can’t tell that from the StreetEasy rental listing beginning in October 2011, but that is clear from the inter-firm listing system). In fact, per the Broker Remarks in our listing system:
Can Not Be Shown without written accepted offer. Currently rented for $17500 per mo until Jan 2014.
So when they came back to market on August 19, 2012, (a) they asked from 16% to 22% more than the unsuccessful 2011 campaign, (b) they had a tenant in place who would either have to be bought out or waited out through 2013, and (c) they would not let anyone in to see the unit except as part of due diligence between accepted offer and contract.
No matter! Contract signed by October 23 at $600,000 more than the price that had been unsuccessful for 6 months 10 months earlier. I can’t explain ….
some neighbors sold, some didn’t
Lest you think there was some dark cloud that descended over 101 Warren Street at the end of 2011, the StreetEasy building page shows that 10 units sold in the building in the second half of 2011. Only 3 units other than #1560 did not sell, despite being offered for sale in those 6 months. But none of them got the full effort given #1560: one was probably a typo (#9BB was on for two days), one was on for 8 weeks (#3060), and one was on for 10 weeks (#5K).
Can’t say there was a general lack of buyers in late 2011 that plagued the building.
I do have a terrible feeling that I am overlooking something that will account for $3.7mm not working in 2011 but a deal getting done at $4.3mm in 2012. Given that I am overlooking “it”, I have no idea what “it” might be.
© Sandy Mattingly 2013